HANGZHOU, China, Sept 3 (Reuters) - U.S. President Barack Obama held "candid" discussions with Chinese President Xi Jinping on the thorniest issues in the relationship between the world's two largest economies, the White House said in a statement on Saturday.

Obama emphasized to Xi that China should abide by a recent arbitration ruling against its claims in the South China Sea, live up to a bilateral deal on hacking and cybersecurity issues, and uphold human rights including religious freedom.

"The president reaffirmed that the United States will work with all countries in the region to uphold the principles of international law, unimpeded lawful commerce, and freedom of navigation and overflight," the White House said in a lengthy statement after the meeting. (Reporting by Roberta Rampton; Editing by James Dalgleish)